Proteases are critical enzymes involved in the cleavage of proteins to smaller peptides and are important molecular targets for drug discovery. Few cell-based technologies exist to assay specific cleavage of substrates by proteases in a HTS format, which has hindered drug discovery against proteases. DiscoveRx is developing a technology that can measure activity of any protease whose substrate selective cleavage site is known. The assay is based on our proprietary HitHunter beta-galactosidase (beta-gal) complementation technology. This method utilizes two genetically engineered fragments of E. coli beta-gal. The larger fragment, termed Enzyme Acceptor (EA), contains a deletion near the amino terminus, while the smaller fragment, termed Enzyme Donor (ED), contains the amino-terminal sequence missing from EA. Alone, EA is inactive. However, it can spontaneously recombine with ED to form an active enzyme that can catalyze the formation of a fluorescent or chemiluminescent product that can be detected photometrically. We have adapted this technology to measure cell free protease activity by synthesizing cyclic ED substrates that contain specific cleavage sites for individual proteases. The cyclic ED peptide can't recombine with EA, but when the protease cleaves the cyclic ED molecule at its specific cleavage site, the linear ED can combine with EA to catalyze a photometric response. We propose to adapt this technology to measure protease activity in intact cells. As proof of principle, we will develop this technology as an assay for gamma -secretases which cleave amyloid precursor protein (APP) to produce two forms of beta-amyloid peptide, Abeta1-40 and Abeta1-42, that are toxic neuropeptides involved in the pathogenesis of Alzheimer's disease (AD). Since Abetas are products of gamma-secretase, this protease has become an important target for the discovery of drugs to treat AD. Presently, there is no HTS assay that specifically measures gamma-secretase activity. However, the specific cleavage sites of gamma-secretase are known, making it ideally suited to e measured in our assay. We will develop a novel cell based assay to measure gamma-secretase activity that can be used to discover drugs to treat AD. When further developed in future phase II SBIR studies, our technology can be used as a general screening assay to discover drugs against most medically important proteases.